ForexSpirit

It has been a bit of a frustrating week with regards to my trading activities.

My plans of action have all been good, but I either thwarted myself out of following through with them or the market just missed my limit orders.

I carried a Q3 trade over from the prior week, which had been entered at 1.3872. The euro did pretty much nothing until the FOMC interest rate announcement on Tuesday afternoon. After that it shot up to the upper regions of 1.39 before falling back slightly. I rarely ever use trailing stops, but I did this time. I placed it 50 pip from the high of the day.

The euro gyrated around 1.3950 on Wednesday and my trailing stop got hit, taking me out of the market. There was no big sell-off, so I felt that at a shot at 1.40 was on the cards. I entered Q4 limit orders at 1.3947 and 1.3972. My luck was out though, and the market just took off during the London session on Thursday with neither of my limit orders being hit. Bummer. The frustrating thing was that price was within no more than five pips of my 1.3972 entry price when I placed that limit order. I guess it can’t hurt to just place a market order for situations like these in future.

USD-JPY was no kinder to me this week. Just before the FOMC rate announcement on Tuesday I placed a Q3 short position on USD-JPY at 115.75. The yen reaction to the 50 basis points cut by the Fed was a lot more undecided than what happened with the euro.

At first the dollar gained by about 30 pips, then it reversed and price dropped quickly down to 115.30, before once again quickly changing direction, this time all the way up to 116.35.

I was targeting a 50 pip profit level. It got close but I wasn’t nimble enough to capture the low, which only latest for a few moments.

At the same time I was watching the reaction to the Fed cut on the Dow (DJIA). It took off like a rocket, so I was worried that the strengthening of US stocks would be an indicator for a riskier appetite amoungst market participants, which would obviously led to more shorting of the yen. There was also the Bank of Japan interest rate announcement which was to come later that evening. If the BOJ kept the rate unchanged at 0.50% (which was the most likely foreseen outcome, which indeed came to pass), then it would be another signal that the carry trade could continue merrily along.

I decided to take a loss, and closed out my USD-JPY trade about 50 pips in the red. I reasoned that if the dollar continued to strengthen then I would be able to re-enter at around the 116.25 level again for an Anti-Hedge trade.

Later that evening, on the off-chance that the BOJ might indeed raise rates I placed a Good-Till-End of Day order: I entered a sell stop order at 115.22, with a profit target of 114.22.

Of course, in the end almost nothing else happened, and USD-JPY just drifted back down to just under 116 for the rest of the day. Even the BOJ announcement had very little impact.

On Thursday the USD-JPY pair caught the dollar bear bug and price dropped rapidly all the way down to 114. If I had held my trade from Tuesday open I would have hit my profit target easily. If I had placed my sell stop order at 115.22 as a Good-Till-Cancelled order it would have been hit and even that profit target would have been hit. If, if, if…

The gain from my EUR-USD trade almost exactly cancelled out the loss from my USD-JPY trade, so things are pretty much all square for the week. It could have been worse, but then again it could have been a fantastic week.

Going forward I have to take the positive aspects of this week (my analysis and initial plans of action were all good) and try to follow through more forcefully with my plans.